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Tuesday, January 06, 2009 Five Questions With...
CREF: How did you get into the real estate business? TS: Prior to joining CBRE, I was a city planner for six years in a major Chicago suburb. Through the course of the position I was involved in creating economic development programs, building code enforcement plans, etc. My daily routines would typically find me having a lot of interface with developers and builders. Also, quite a few evenings per month, I'd be running the zoning board meetings or the economic development commission meetings and you can just imagine how many contacts I made and relationships that were built amongst these real estate people. It just so happened that one of the gentleman who chaired the long range plan commission told me one day that between my technical knowledge and my personality, I was perfectly suited to get into commercial real estate brokerage. As it turns out the gentleman also hired me and gave me my job with Coldwell Banker back in November 1985. CREF: What notable deals have you been involved with? TS: To me, all my deals are notable. That's because when we're hired or given a listing by a client, they're asking us to basically solve a problem by crafting a marketing plan and executing strategy. If we can accomplish their objectives, we have provided them with a valuable service. We've created value and built trust as their advisor. Notable deals for my team were probably over the last three years when we completed the sale of the Quaker Oats (now PepsiCo) Headquarters [$120 million sale in November 2004], the Boeing Headquarters [$165 million sale in September 2005] and the US Gypsum Headquarters in the West Loop [$178 million sale in November 2006]. That gave us the distinction of selling three Chicago-based Fortune 500 headquarters in a row. CREF: In what commercial real estate industry do you specialize? TS: My team specializes in the sale of office buildings in the Chicago business district and other major Midwest markets. When I joined the firm, the company had really begun to understand the real estate markets and saw that specialization - both by property and geography - was the key to successful brokerage. As the CB platform has been built, we virtually can provide our clients with resources in almost every market around the globe and every resource they need to accomplish their objectives, whether it's leasing, sales, financing or facilities management. I was particularly fond of the CBD when I started because I was a city planner and have a degree in Urban Planning and have always been fascinated by cities. So it was natural for me to gravitate toward that specialty. It's a very exciting and vibrant market. Office buildings are very complex with a lot of moving parts. We've sold buildings with as many as 100 to 125 tenants - it's constantly evolving. CREF: How has the industry changed since you've been involved? TS: I've had the opportunity to be here in the CBD office market for 22 years. I've seen several recession/recovery cycles and watched our industry evolve. It's changed on two fronts. First, the real estate investment sector has really become firmly established as a segment along with stocks and bonds. The real estate capital markets have become highly complex and creative over time. There are now a myriad of opportunities an investor may have to structure equity and debt. Also, information is readily available and technology, sophisticated software and marketing tools are all mainstream versus the 1980s when not too many brokers had computers on their desk. Secondly, on the brokerage front, we as professionals have also evolved by employing a well thought out team approach. We bring whatever resources the client needs to achieve its goals. Back in the old days, there might have been one guy doing all types of properties and working as a loan broker. But it was tough to build relationships and establish trust when you were jumping from one deal to another. We're vastly more educated as a group and we're now advisors in the real estate capital markets versus the transaction-oriented deal makers of the past. CREF: How does the market look over the next 12 months? TS: We've been here before. There is a market correction going on and we will recover. I think 2008 will be a year for healing all the ailments in the credit markets. My sense is that transaction volume will probably slow considerably in 2008 as investors and lenders adapt to new underwriting criteria that will be the standard for real estate investment. I think the private capital syndicates that relied on complex or high LPV debt will probably slow down their buying prowess, especially compared to prior years when private capital players would acquire 50 percent of real estate investments in any given year. For the most part, prices have stabilized, as have yields in the major markets, with a few exceptions. But I feel positive given the vast amount of capital that was out there to buy and lend before the market crunch in August - they're going to be impatient sitting on the sidelines for too long. I think we're all just having a moment to reflect and prepare for the next cycle and we should start to see signs of that as we get into the latter part of 2008. Filed Under: Five Questions With... E-mail this article to a friend | Printer friendly format| DIGG this| Post to del.icio.us Comments on this article
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